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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Meathead who wrote (45276)	5/28/1998 8:03:00 PM
From: AlanH	Read Replies (2) \| Respond to of 176387

What advantage does CPQ have over Dell going forward in the WinTel Workstation/Server segments? I believe that DELL's future growth issues are not predicated exclusively by CPQ. Therefore, a treatise on DELL v. CPQ would be unsatisfactory, both for DELL advocates and skeptics. In fairness to your question, a few comments are posted below. (Please understand that I am a trader and am neither inclined nor motivated to defend each point. I would anticipate that investors with long-term interest in DELL would explore the possibilities independent of supporting evidence.) General Trends: * PC market segments will consolidate, and become more rigidly defined. Consumer space will become increasing price sensitive, ultimately resembling more traditional electronics; that is, a direct sales model will be less practical. Commercial space will seek highly scalar Wintel servers, establishing top-bottom relationships with vendors who can provide such products; as implementations become more mission critical, service offerings will become paramount. Middle market players will find it increasingly difficult to compete on a large scale. * M&A activity among Telcos, networking vendors and service providers will intensify, resulting in a broader range of services to consumers and industry. (We see this occurring now.) As content and delivery shift, the requirement for "fat" clients will be diminished. Arguably, the near-term reaction is a sparked interest in feature rich PCs. (We see this occurring now.) * Global 24hr (sun-up/sun-down) operations will become a competitive necessity. The resulting requirements will intensify the need for platform (and, vendor) consistency and service. [Although the above trends are evolving over years, the dynamics are in play today.] Specific to CPQ: * CPQ has established dominant market share at the high and low end. * CPQ has demonstrated an ability to scale manufacturing at critical masses beyond DELL's experience base. * CPQ has well-establish indirect channels which are more effective in price sensitive markets. (This is counterintuitive to the argument that as margin is reduced, indirect models suffer. Such reasoning is unfounded and has no validity in mass markets.) * CPQ is in the process of reinventing its service model. Although this is a work-in-progress, CPQ is further along the learning curve in an area that will become increasingly important. * CPQ has scalar server technology in place today. (If, as you argue, desktop PC demands are insatiable, then the demand is amplified for servers.) * CPQ has an ability to gain account control at the top, and drive business down through relationships, VPAs, etc. * CPQ can cannibalize certain segments to the advantage of others. (Admittedly, I am unaware of CPQ FASB practices and do not know which units are operationally discrete, if any.) I hold no allegiance to either CPQ or DELL, and am merely making 'outside' observations. Remeber: we're talking about sustained growth rates. If you do not accept the above notions, that fine. Please don't ask me to debate. Good luck with your investments. Alan

To: Meathead who wrote (45276)	5/28/1998 8:18:00 PM
From: Bilow	Read Replies (1) \| Respond to of 176387

Hi Meathead; Thanks for the numbers. I presume that DELL's growth improved in Q198. The figures you gave: Q496 Q197 Q297 Q397 Q497 Growth Compaq 115,656 115,514 124,506 142,542 174,681 51% IBM 52,568 44,020 55,482 59,881 80,248 53% Hewlett 50,644 51,890 54,290 54,850 70,135 38% Dell 18,637 21,047 28,423 36,055 42,414 128% Show DELL with market shares (among the companies shown) of: 7.8%, 11.0%, 10.8%, 12.3%, and 11.5%. Almost all DELL's excess growth happened between Q496 and Q197, not in the rest of the year. Clearly the other companies took a good bit of DELL's market share on that last quarter. Is BTO just normally low volume for the fourth quarters? -- Carl